Being in debt, though quite popular, is not conducive to the American dream for the average person. In a country hooked on fast food and over-priced, aggressively marketed products, credit card debt is running rampant. Your resolve to reduce debt must be rock solid as short-term wants can easily out weigh the long-term goals as we are easily hypnotized by all the shiny objects that are put in our faces all day every day.
When you receive that shiny card with the HUGE credit limit and your name on it, it’s very hard not to give it a try. Minimum payments ranging from twenty to fifty dollars a month sound quite reasonable, easy in fact. So easy that even if you max out the card you still only have to pay the minimum amount which makes it very easy to postpone full payoff until… someday.
Whoops, you didn’t consider the flip side of compounded interest did you. Yes, the monthly payment that looks so low only pays off the interest on your credit card debt which is compounded every month. Miss one payment and your awesome interest rate shoots up to 19% or 24% or higher. Worse yet, if you get one of those “no payments for 18 months” deals and actually don’t make any payments for 18 months, your account just accumulated interest for over a year with no payments to cover the increase.
You are not alone. I know many people who are up to their ears in credit card debt as well as student loans, car loans and mortgages, myself included. You wake up one day to find yourself working 60 hours a week and getting absolutely nowhere financially. Now you get to freak out every month worrying about money. It’s always the same, sitting there in front of the computer looking at your bank account, looks pretty good, you’ve got a few thousand in there because you worked like a demon all month. Now its time to attack that stack of bills, rent, electric, gas, phone, etc… Now for the credit cards, $100 here, $50 there, done. Cool, still have a thousand left in the bank. But hold on a second, looking now at the balances on the credit card it seems they are the same as last month or maybe a mere $20 less. But I just paid $150 how could my balance still be so high? That my friend is the beauty of credit card debt. Once you’re in, you’re in for the long haul and that’s the way they like it.
Looking down the road, business loans, marriage, kids, college tuition, travel, retirement, and all the good things in life seem to go belly up. Credit card debt is crippling and there is no easy way out. There are plenty of companies out there that offer solutions to help you reduce debt. Debt consolidation loans, home equity loans, and personal loans are all legitimate ways to reduce debt however the most important factor is your mind set. If your mind is not made up and your resolve is not rock solid, getting into another loan will be dangerous and continue the downward spiral.